The Gold Book

Lease Security Accounts
A lease security account is a statutory creation intended to hold deposits of rent security in escrow for the protection of landlords and tenants.  In New York, the  rule pertains to property rentals in a building with six or more family dwelling units and  in New Jersey, the rule applies to landlords with 10 rental units or more.

In accordance with N.J.S.A. 46:8-19, a New Jersey landlord is no longer entitled to receive, as administration expenses, 1%  interest on the balance in the account. The interest paid on the deposit amount belongs to the tenant.

According to the New York General Obligations Law Section 7-103, a lease security deposit must be placed at a New York banking organization in an interest bearing account, with the first 1% of interest earned on the account remitted to the landlord.  The balance of the interest may be paid to the tenant or given as a credit against rent.  The law states that the lease security deposit (usually 1 or 2 months of rent on a residential lease) must be placed in a “prevailing rate” account.

• But what if your non-CD accounts are paying 1% or less?  Does this mean the landlord gets all the interest on the account?

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The federal agencies that supervise banks, thrifts, and credit unions, and the Farm Credit System, published guidance last week that updates the Interagency Questions and Answers Regarding Flood Insurance that were most recently published on July 21, 2009 at 74 FR 35914-35947.

The guidance finalizes two questions and answers that had been previously proposed.

The agencies request comment on three additional proposed updates to questions and answers relating to force placement of flood insurance.

It is the intention of the agencies that, after public comment has been received and considered and the guidance has been adopted in final form, the agencies will issue a final update to the 2009 Interagency Questions and Answers Regarding Flood Insurance. The final update will continue to supplement other guidance or interpretations issued by the agencies and the Federal Emergency Management Agency.